“Showrooming” Increasingly Affecting Bricks-and-Mortar Retailers

via “Showrooming” Increasingly Affecting Bricks-and-Mortar Retailers | Consumer Watch, clarionledger.com, 2/28/2013

Michael Hudgins of Madison was helping his wife shop for patio furniture recently, and the couple fell in love with a set they found at a local retailer. The only problem: the price was a lot higher than they were ready to spend. Undaunted, Hudgins noted the brand and model of the set, then went searching online. After finding the exact same table online for “hundreds of dollars less” and with free shipping, he ordered the table. The couple went on to purchase the chairs and umbrella locally, but saved lots of money in the process.

Hudgins’ story has become increasingly common these days. The practice of “showrooming”, in which consumers go to bricks-and-mortar stores to check prices and see merchandise, then go back to purchase the item online at a discount, has begun to affect local retailers in some communities. Showrooming is much simpler than ever before, thanks to Smartphone apps which allow customers to scan and save bar codes for items they want, and then take the information home and use it to purchase items online.

A study released Wednesday by the analytics company Placed sheds some light on the phenomenon: retailers with bricks-and-mortar stores are at a disadvantage when it comes to competition from online commerce sites.

The practice can have adverse effects on retailers such as Best Buy, who have a lot invested in their stores and inventory, as well as smaller retailers which may not have the resources available to large retail chains. Online retailers enjoy a huge advantage over bricks-and-mortar stores, because they lack the overhead of operating large stores and maintaining heavy inventory. There is also the matter of convenience: shopping in your pajamas at 3:00 a.m. is one benefit of our increasingly-digital age.

The Placed: Aisle to Amazon Study, is based on interviews nearly 15,000 respondents, added to what the company claims is “1 billion data points” collected during January. The survey asked consumers one question: “Have you purchased an item on Amazon.com after looking at the same item in a physical retail store?”

The data resulted in what Placed terms the “Retailer Risk Index”, which shows that some retailers, such as Bed, Bath & Beyond and PetSmart, are at considerable risk from showrooming. For example, consumers are 27 percent more likely to visit Bed, Bath & Beyond than The findings of the survey covered only “big box” retailers, and ignored smaller ones, but the effect is likely to be the same.

Showrooming is becoming popular in the Jackson metro area, as well, but often with a twist: it doesn’t always harm bricks-and-mortar retailers and could actually help them by boosting customer loyalty.

Savvy consumers such as Cathy Hayden of Florence have found that stores can use their online sites to supplement the range of merchandise — and deals — available. Hayden bought an item online at the urging of a clerk from Home Depot. While shopping for a storm door with a built-in pet door, Hayden found that the store didn’t have the door in stock, but urged her to go to Home Depot’s online site and get the item — with free delivery. “I thought he was really nice to point that out to me,” she said. She added that the positive experience has helped ensure her loyalty in the future.

Recent bride Hannah McWilliams Lewis of Clinton and her then-fiance’ Justin went to a local jewelry store to find a wedding band for Justin. After sizing the fit, the “very nice” clerk pointed out that she could find the same ring on Overstock.com at 1/5 the price, and with a warranty. “Gotta save where you can! she pointed out. And it’s the same wedding band!”

The study also looked at the differences between men and women in their showrooming behavior. It’s no surprise that men tended to showroom more at electronics stores such as Best Buy and home stores such as Lowe’s, while women showroomed more at clothing stores such as Kohl’s and Old Navy, along with pet stores such as PetSmart. Mega-retailers such as Wal-Mart are also on the “high-risk” list, but many have been aggressive in fighting the phemonenon.

One way to fight back is price-matching of offers found online, in much the same way many already do for competing bricks-and-mortar stores. But matching prices from your competing hardware store across the street is one thing: it’s another to match prices from online retailers with low overhead, or from the big-box retailer. Another strategy adopted by some retailers is just not to do business with Amazon and other online retailers.

For example, in 2012, Target and Wal-Mart stopped selling Amazon’s popular Kindle e-book reader, while bookseller Barnes and Noble sell competing items such as Barnes & Noble’s Nook. Other strategies being tried: offering exclusive products that can’t be found online, and creating a better in-store experience.

The lesson for retailers, though, appears clear. Online competition is here to stay.

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